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Decoding Xaas: How to Rethink Business Models to Drive Value and Innovation
Episode 2724th August 2021 • Decoding Digital • AppDirect
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Is digital transformation essential in a modern business? David Sovie, Senior Managing Director, and Vik Viniak, Managing Director and Senior Partner at Accenture, believe that with transformation comes growth. In this episode, Vik and David discuss why digital business models are critical for success and how companies can rethink their own products and services.

Press play to hear David Sovie and Vik Viniak’s thoughts on…

Improving Products by Making Them Platforms

"The reality is that the Tesla car that you have today is actually a better car than three years ago. In the history of the world, that's never been true. It's only when you can have this kind of what I like to call 'evergreen' meaning, it's a continually upgradeable platform that you can actually improve features and functionality over time." —David Sovie

The Importance of Persistence

“Once you're on this journey, you're all in and you have to stay patient and you have to stay persistent on the journey. You can't just turn around in six months and say these things are not happening fast enough because to turn around a ship, it takes time.” —Vik Viniak 

Partnering for Success

“I'm a firm believer that you've got to build your ecosystem. You’ve got to pick the right partners. And then you’ve got to go all in, whether it's to build a product, whether it's to scale or whether it's to drive growth in the market.” —Vik Viniak

Transcripts

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This is not a small little tweak

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to your business. It is a

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fundamental transformation of

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your business model, and it

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needs to be board- and CEO-

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sponsored, and you need to think

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holistically, because it impacts

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every single process. It impacts

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how you develop products, how

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you market them, how you sell

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them, how you service them.

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Once you're on this journey,

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you're all in. You have to stay

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patient and you have to stay

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persistent on this journey. You

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can't just turn around in six

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months and say these things are

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not happening fast enough

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because to turn around a ship,

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it takes time.

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This episode of "Decoding

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Digital" is going to be a little

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bit different. Instead of

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interviewing one guest, I sit

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down with two of the foremost

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experts in digital business

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models, David Sovie, and Vik

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Viniak. In their roles as

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managing directors at Accenture,

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both David and Vik have played

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an integral part in helping

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companies around the world

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develop digital transformation

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strategies and put them into

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action. Based in Chicago, Vik

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leads Accenture's electronics

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and high-tech industry practice

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within North America, where he

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focuses on using analytics and

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AI to drive business

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transformation. He has extensive

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experience in Industry X.,

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supply chain organization design,

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and other complex areas. David

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is based in Japan. He is

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Accenture's global high-tech

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industry lead. He is responsible

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for driving the high-tech

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industry growth, thought

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leadership, client portfolio,

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and market positioning. David is

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an expert in rethinking

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traditional business models. In

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2019, he released a book on the

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topic called "Reinventing the

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Product -- How to Transform Your

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Business and Create Value in the

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Digital Age." In this episode,

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David and Vik talk about why

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digital business models are so

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critical for success and what

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companies can do to start

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rethinking their own products

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and services for the future of

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commerce. This is Daniel Saks,

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co-CEO of AppDirect. It's time

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to decode everything as a

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service.

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Welcome to Decoding Digital, a

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podcast for innovators looking

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to thrive in the digital economy.

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I'm your host, Daniel Saks. I'll

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sit down with other founders,

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CEOs, and change-makers to

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decode the trends that are

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transforming the way we work.

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Let's decode. David, Vik,

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welcome to Decoding Digital.

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Super excited today to profile

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both of your work on as-a-

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service business models. As

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we've discussed on Decoding

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Digital, the importance of

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digital transformation is really

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critical for our customer

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success. It's not just about

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the technology, but it's also

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about the business models that

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allow business customers to

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easily consume the services that

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we're providing. David, I know

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you actually wrote a book

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focused on as-a-service models

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called Reinventing the Product.

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I was really excited about the

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book and the content, but wanted

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to double-click on which

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companies have exceeded it

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reinventing their products, and

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how have they done that through

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the innovation of business

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models.

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Yeah, absolutely. First, thank

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you for having Vik and I on your

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podcast. We're super delighted

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to be here. I'll give you a

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preamble then answer your

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question. I always talk a little

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bit about why now? Why now our

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company is talking about

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reinventing the business model

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to as-a-service? What's

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different now? First, it starts

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with the fact you have to

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acknowledge that to have an as-a-

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service model, at least a

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compelling one, you need a

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product that's smart, with

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enough processing power,

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connected at a high enough

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bandwidth, and ideally AI-

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enabled. The reality is even

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five years ago, most of that was

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not possible. Without 4G, and

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now soon 5G networking, you

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didn't have the bandwidth, power,

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and processors, used to need to

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have a $500 or a $1,000 device

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to have enough processing power

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to have a really smart product.

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Related to processing power is

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the sensors, because to really

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be smart, you need sensors on a

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product. The reality today is

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sensors cost pennies. You can

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get processing power for pretty

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inexpensive along with the

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connectivity. As the world

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moves to smart, connected

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products, then the logical

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question a lot of companies ask

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is, "Do I sell this as a product

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or do I, when it's connected and

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it's always being updated and

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evergreen, why not actually

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shift the business model to an

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as-a-service business model?"

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That's a little bit of context.

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Then if you ask, "Who has done

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this?" I often say to product

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companies, you might think

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software companies are a little

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different than you, but remember,

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software used to be sold as a CD-

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ROM and sent in a box. The

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software industry has almost

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completely pivoted to software

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as a service in the last five

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years. There was the born-in-

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the-SaaS-model companies like

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salesforce.com, but people

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forget that Adobe was probably

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one of the first leaders to

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shift from a traditional

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software business model to a

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SaaS business model. A lot of

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the hardware companies are still

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on that journey together. A few

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examples of companies are

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interesting. Apple still makes

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most of its revenue from selling

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hardware, but if you look now,

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they have a 50 billion-dollar-

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plus services business. They've

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taken that platform and now you

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have Apple Music, Apple Cloud,

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Apple TV. You see a lot of

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hardware companies trying to

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emulate that. We could probably

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get in a few more examples as we

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go through, but that's my simple

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overview answer.

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What do you think that the

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product companies can learn from

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the software playbook on some of

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the examples that you provided

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of traditional software

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companies like maybe the Adobes

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of the world or the Microsofts

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of the world successfully

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transforming? How do you bring

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that to light in the products

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that are trying to transition to

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as-a-service business models?

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Basically, every hardware

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company I know is asking this

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question today of, "Can I and

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should I transition to some sort

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of as-a-service model?" Some

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people call it device as a

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service, hardware as a service,

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infrastructure as a service.

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There's different flavors of

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that business model ship. Every

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CEO I know is asking that

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question. Again, why? One is

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because it's technically

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possible, as I said before, but

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two, Wall Street rewards that

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shift that this recurring

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revenue business model results

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in much higher valuations and

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much more durability of revenue.

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The starting point I often say

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is this is not a small little

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tweak to your business. It is a

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fundamental transformation of

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your business model, and it

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needs to be board and CEO-

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sponsored, and you need to think

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holistically, because it impacts

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every single process. It

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impacts how you develop products,

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how you market them, how you

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sell them, how you service them.

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In particular, the software

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industry did a good job of

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creating this whole idea of

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customer success to say, "It's

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not a one-time sale. I now need

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people who actually think about

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driving adoption and usage of

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the as-a-service business model."

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As a simple example, that

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function doesn't exist in a

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hardware company. There's no

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such function that says once you

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sell a product, I think about

Speaker:

driving usage and adoption

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and the customer

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success with that product over

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time. At the simple level, I

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say it needs to be a board and

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CEO-sponsored transformation. It

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needs to be holistic end to end.

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I know maybe Vik could comment

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on that. I know you're working

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with one of your clients that

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are pretty closely on that shift

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in business model.

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To add to what Dave mentioned,

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there are a couple of other

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things that need to be learned.

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As you make that pivot from a

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product to a platform as a

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service or as-a-service

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offerings, basically, you need

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to be also thinking about the

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agile principle that the

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software industry has grown into,

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especially for your architecture.

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You need to make sure you're

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doing agile development, because

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typically, these product

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companies are very much of

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engineering focus where you need

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to get end-to-end down in a very

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waterfall fashion. Bring that

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agile principles in. The second

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thing is Dave was talking about

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the transformation. You think

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about it's full cultural

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transformation, because today,

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I'm selling a widget that is

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hundreds of thousands or

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millions of dollars and I pay my

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Salesforce commission based on

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that. Now, I'm asking people to

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have a subscription which is

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maybe only a few 100 a month or

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a few $1,000 a month. You're

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changing the mindset. Showing

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people the value that that's

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going to bring, the pivot that

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is going to happen, that's

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another principle that need to

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be brought in. The third thing

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is that this is a dual dynamic.

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If you look at product forward,

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what features of your product

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are going to enable the success

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for the customer, what value

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they're going to drive? Market

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backward, what is the word the

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market is looking for? Staying

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close to your customers and

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making sure you are constantly

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innovating and creating features

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in your product that the

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customer is looking for and

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having a closer fit of those two.

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I feel those are some of the

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other things that, from a

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software industry, that product

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companies should be adopting.

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I know, Vik, you've worked with

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many companies that have gone

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beyond thinking about how to

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shift software to as-a-service

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or recurring, and even beyond

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products. How do businesses

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think about, let's say, bundling

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product services and other value

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points to drive this recurring

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business model strategy?

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Absolutely. There are two

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mindsets that you need to be

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aware of as the companies are

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making that pivot. First and

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foremost, you already have a

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customer base where you're

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selling product very

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successfully. From that

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customer base, there are some

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early adopters who want to be in

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the front end and who want to be

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with the cutting edge of the new

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innovation that you are bringing.

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Take those customers on that

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journey with you, bring them to

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co-innovate with you, help them

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tell you what they're really

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looking for and how you can make

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their life better. The whole

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concept of customer experience

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becomes even more amplified.

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It's all about customer

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experience. Without driving that

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better customer experience, you

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cannot create a product that is

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going to be a hit in the market.

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The second thing to look at is

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look at your product and look at

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where the industry is headed.

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Can I move into adjacencies? Can

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I move into adjacent industries?

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If you don't move it, someone

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else will do that, because your

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product will become as a source

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of what happened to some of the

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telcos. It's like they've had

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what they call the fiber, but

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it's a dumb pipe, because it's

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just used for the data. There

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were companies who were coming

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and building OTT platforms on

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top of that, or plugging

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applications in that can drive

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the benefits. You want to have

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incentivized people to innovate

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and come into your architecture

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and innovate with you and layer

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on top of your platform while

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making sure that you're also on

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the cutting edge. You're not

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leaving it all for others to

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come in and capture that market

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share. You want to pick some

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spots, and then you want to open

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up other spots for the ecosystem

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to come in and innovate with you.

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In your work at Accenture, you

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obviously consult to some of the

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largest organizations in the

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world about their transformation.

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As we saw with the as-a-service

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software models, oftentimes, it

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was the upstarts that figured

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out how to thrive and become

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large companies. When you're

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looking at the next cohort of

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companies that are trying to

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transition, how do you advise

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them on effectively making this

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transformation, recognizing all

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the restrictions in their old

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way of doing things, but also

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recognizing that they have a

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great brand? Where do they start

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from an organizational

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perspective?

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I'll start, and Dave has a lot

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of experience in this as well.

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I'd love Dave to build on this

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thing. First of all, a lot of

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the clients at this point are

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like transformation-fatigued out

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at this point, because

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everything is a transformation.

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Imagine digital coming at a

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million miles an hour at them,

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then the whole need to look for

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new revenue models. Companies

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which are doing an agile

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approach in a way that, "OK, I'm

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going to pick a couple of

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products. I'm going to test them

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in the market. I'm going to

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scale the success of that, and

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I'm going to go after in a

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bigger way," that's number one.

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Second is, from a cultural

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perspective, you have to act

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like a start-up while making

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sure that you are still a large

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organization. Let me explain

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what I mean by that. You need

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to have innovation and you need

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to have people incentivized to

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fail fast, but you also need to

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encourage people to use the

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infrastructure of the large

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organization that has been set

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up. In a start-up, you don't

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have all that infrastructure.

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You have a strong customer base

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today. Don't try to go find new

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customer base, leverage the

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existing customer base. You have

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the back office that is already

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there set up. Don't try to

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recreate new back office,

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leverage what you have.

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Similarly, you have the

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relationships that are there, so

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leverage that. I feel that

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that's the approach that has to

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be followed. Don't try to do

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with a big bang. Rather, do an

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incremental so you can drive

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that success.

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This is a hard question

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and it varies a little bit by

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company. The core question to me

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is, is your existing core

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business going to be completely

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disrupted by this shift to as-a-

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service in a major way, or is

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it going to be slow and gradual?

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Or, is there going to be a

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segment of the customer

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population that is interested in

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this so that you could go a

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little more slowly, if you will?

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It's certainly much easier if

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you could say, "OK, I got this

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core business. It's going to

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continue running. It's going to

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generate cash, while I could

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build a side business or a new

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co-model to offer new types of

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as-a-service business models to

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my installed base customer." I

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see a lot of that. "OK, my core

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business is my core business,

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but I'm going to try to add on.

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I'm going to create a new

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revenue stream by creating some

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new digital services or digital

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service models that complement

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that." If you could do that,

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that's by far the best. The

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reality is there's some

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businesses that are going to

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completely shift. If you don't

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say, "OK, this is how my model

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is shifting and I'm all in,"

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that's the core question. Do you

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need to, in certain product

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segments, say, "I'm all in

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and this is the future

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of my business"? At least in

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the software industry,

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eventually, the answer was

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you're all in. You're all in on

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SaaS and the old shrink-wrapped

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software on a CD-ROM in a box is,

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in many cases, gone, or

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on the way to being gone.

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You've got to ask yourself that

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question. "Is this something

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that can compliment and my core

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business is fine from there 5 or

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10 years, or is this really

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something that's going to cause

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me to have to actually

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completely flip the switch?"

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What are some examples in the

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product economy that you think

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are well-suited to go all in?

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I'm going to give you a couple

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of examples. It hasn't quite

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flipped yet, but the automotive

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industry is getting close to

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that world. You say Tesla has

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proven what is a car. A car is

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basically a computing platform

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and software with four

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wheels on it, in the sense that

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a Tesla car and others like it

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are very much an evergreen

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platform that's continually

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upgraded and updated. The

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reality is the Tesla car that

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you have today is a better car

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than three years ago. In the

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history of the world, that has

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never been true. If you

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bought a product three years

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later, is it a better product?

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It's only when you can have this,

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what I like to call an evergreen,

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meaning it's a continually

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upgradeable platform that you

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can improve features and

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functionality over time. You're

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starting to see this world

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already, where people like Tesla

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are saying, "Well, I'm taking

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the first baby steps, so I'm

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going to charge you for upgrades

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so you want to pay for

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autonomous driving. That's more

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of an upgrade package." They,

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and others, are very much

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talking about, "Well, why don't

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I move all the way to an as-a-

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service model for access to

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vehicles at any given time?"

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That's one interesting area that

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everyone understands. The PC

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industry might be on the verge

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of making this shift. A lot of

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the laptop companies are

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basically saying, "Well, you're

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going to upgrade this product

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every three years anyway, so

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why not try to find

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some ways to make this an

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evergreen as-a-service business

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model?" I do believe there's

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going to be a number of segments

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that will, 5 or 10 years from

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now, flip a switch, and then the

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question is, is it going to be

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happening in a 2-year window, or

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is it going to take 5 or 10

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years in order for the switch to

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fully flip?

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Let me build on what Dave said,

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give another example, which is

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around the concept of software-

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defined hardware upgrades. I

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have a Tesla, and each month, I

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get a new feature, which almost

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makes it like I'm getting a new

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car. Imagine someone who wants

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to get a new experience in the

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car and you have to go in, and I

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got to change the seats, and I

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got to get this. Everything is

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an upgrade here. A lot of these

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upgrades are being constantly

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pushed out to the customers.

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Now, that almost creates the

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newness of the product and keeps

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that hook in on the customer.

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The day is not far for -- I know

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some of the car companies are

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already trying that -- car as a

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service, where each six months,

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each year, you can go and drive

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in a new car. Obviously, it's

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expensive, but if that's the

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lifestyle you want, the option

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is available.

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Fantastic examples and ones that

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everyone can relate to. What

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I've seen from interacting with

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a lot of our clients is that in

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order to drive these all-in

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transformations, it takes more

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than just the technology. It

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takes a cultural shift. What are

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the characteristics that you've

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seen in leaders who have been

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successful at driving all-in

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change?

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First, it needs to start with

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the recognition of what you just

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said. This requires not only a

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business model transformation

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but a cultural transformation.

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The reality is traditional,

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particularly product hardware,

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companies have culture and

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processes that were built 20 or

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30 years ago for a different

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world. They were built for very

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much a... I launch a new

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product once a year. It's a

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transactional sale. I sell it to

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a distributor or to a retailer.

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Then maybe I have a warranty

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card that tells me who my

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customer is, but I don't really

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have any ongoing relationship,

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in a meaningful way, with that

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customer. To actually adopt and

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say, "I now need to actually

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have the mentality of a services

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company," to say that the

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product is just a way to create

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a footprint to facilitate an

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ongoing services relationship is

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a dramatic cultural shift.

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Trying to get all the

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organizations to actually

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understand and be metric-ed on

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things like adoption, not just

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customer satisfaction but

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adoption and usage of the

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features of the platform.

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That's an example, again, I

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think you can get some

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inspiration from the software

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industry to say, "Hey, I'm

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actually measuring my people and

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creating some of the

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compensation and the visible

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metrics tied to usage and

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adoption and advocacy for the

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platform." That is just a

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massive shift. It's just not

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something that traditional...

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Product companies' culture is

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just not geared that way.

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They're geared to design a

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product and launch it and then

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move on to the next one.

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Definitely, this all-in decision

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is huge. It requires a cultural

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shift, a transformation, a

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business model trend. You have

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to go all in. Going partial in

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on this strategy could create

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friction, confusion. What's the

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balance of saying, "OK, we have

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to do this. We have to go all in.

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We have to go fast," versus

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letting them take their time and

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overthink it? Then three years

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go by, five years go by. A

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startup is eating their lunch.

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We as consultants have to

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recognize that the pace at which

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we move is actually much faster

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than the pace at which our

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clients want to move. You have

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to lay it out for them and then

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let them make the decision.

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What happens is when they make

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the decision with all the data

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that you have given and you

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guide them through their

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decision, it's a better decision

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versus a decision that gets

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forced on them by even their own

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leadership. The leadership buys

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in. The CEO, let's say, buys in.

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The organization doesn't buy in.

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To some aspect, you have to have

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the right deliberation to get

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that right consensus. Then the

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leadership goes back into the

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all-in. Once you're on this

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journey, you're all in. You have

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to stay patient and you have to

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stay persistent on this journey.

Speaker:

You can't just turn around in

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six months and say these things

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are not happening fast enough.

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To turn around a ship, it takes

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time, versus like turn around a

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car.

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I feel this trade-off between

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speed and also management of

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expectations. One of the things

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that I found is that at a bigger

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organization, people who are

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working on an innovation project

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do need quick wins to build or

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showcase progress, but at the

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same time need the support from

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the larger organization in order

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to adopt it in a reasonable

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timeframe. How do you balance

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this need for speed with the

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reality of managing expectations

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to drive overall transformation?

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First, I'd say that it's not

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easy, and is also linked to this

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comment before. Is this whole

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market going to flip a switch,

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or is this going to tackle a

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segment of the market? If the

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whole market flips a switch, the

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actual P&L and cash flow of a

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company has a dramatic impact.

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The CFO and the CEO need to

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think really hard to manage Wall

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Street's expectations and the

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employee base expectations. The

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transition period is going to be

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very painful, because you

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actually are going to have

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revenue go down potentially for

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a period. Instead of just

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selling a product for a thousand,

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as Vik said, you're going to

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sell in as-a-service model and

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next year's revenue is going to

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be $100. That transition period

Speaker:

is pretty painful. If you think

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you need to do it all and switch,

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you need to actually have the

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right clarity of messaging to

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all stakeholders, to Wall Street,

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and to your employees and make

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sure that you understand that

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transition period is going to be

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a challenge. Even if it's the

Speaker:

second model, which says I could

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start with a segment of the

Speaker:

customer, here, a great example

Speaker:

is light bulbs. I always joke if

Speaker:

you can think of one of the

Speaker:

world's dumbest products

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historically, it's a light bulb.

Speaker:

It's a piece of glass with a

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filament inside. There is not

Speaker:

much to a light bulb. Today, if

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you look at a smart, connected

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light, I talk about it in the

Speaker:

book I wrote around Signify's

Speaker:

example, the old Philips

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Lighting, where they created the

Speaker:

Hue platform. It's an LED light

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that's based on semiconductor

Speaker:

technology, but you can control

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it and access it remotely via

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your smartphone. That actually

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ends up being a segment of the

Speaker:

population. Say there's a

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segment that's willing to buy

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this higher-end, higher-

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functionality smart, connected

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lighting, even then, in order to

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build that, you need to ring-

Speaker:

fence significant investment

Speaker:

dollars to say this may take a

Speaker:

while to build this. How do I

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create that investment envelope

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with a commitment to protect

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that investment envelope for a

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multiyear period in order to

Speaker:

build that business? There is a

Speaker:

two-speed model. There's the

Speaker:

flip the switch version and

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there's the, "Hey, I can

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actually have a complementary

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new business that is going to

Speaker:

lower my financial performance

Speaker:

in the short term, so I

Speaker:

need to protect it. It has the

Speaker:

potential of actually being

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significantly more profitable in

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the long term." It's a very

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hard balance to make. It's super

Speaker:

important to be very explicit in

Speaker:

your messaging and in your

Speaker:

financial planning.

Speaker:

We've talked about the

Speaker:

opportunity to go all in on as-a-

Speaker:

service business models. We've

Speaker:

talked about the need for

Speaker:

cultural change and the

Speaker:

leadership characteristics and

Speaker:

dynamics to ensure that that

Speaker:

change can be successful and the

Speaker:

way to manage expectations of

Speaker:

the teams. Let's take a few

Speaker:

minutes to double-click on the

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technology. As a product company

Speaker:

is looking to shift to an as-a-

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service model, there's obviously

Speaker:

a whole new tech stack that can

Speaker:

enable the commerce, and the

Speaker:

metering and monitoring, and

Speaker:

subscription enablement, and the

Speaker:

user interface, and the

Speaker:

ecosystem. Can you speak to

Speaker:

some of the challenges that a

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business might have on sourcing

Speaker:

this technology and getting

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going with adopting new

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technology to make this shift?

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First, what you just said is

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absolutely true, that underlying

Speaker:

technology platforms that

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product companies have built

Speaker:

were built 10, 20, 30 years ago

Speaker:

for a transactional product sale.

Speaker:

As they've launched,

Speaker:

particularly if they launched

Speaker:

more of a skunkworks or pilot

Speaker:

effort around as a service,

Speaker:

they used some bubble

Speaker:

gum and mailing wax to

Speaker:

enable it. The reality is they

Speaker:

can't do many, many things.

Speaker:

They don't have systems that

Speaker:

allow you to have a customer

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self-configure an as-a-service

Speaker:

solution. You go in, you want to

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buy a product, you want to pick

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which features and

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functionalities that you want in

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an as-a-service solution and

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configure it and buy it directly.

Speaker:

They don't have that. They

Speaker:

don't have the ability to track

Speaker:

the entitlements to say, "Well,

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OK, this customer bought

Speaker:

something with certain access,

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service entitlements," which is

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quite common in the software

Speaker:

industry. This idea doesn't

Speaker:

exist. What is the

Speaker:

entitlement rights? The notion

Speaker:

of doing ongoing monitoring,

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yeah, sure. Maybe they did some

Speaker:

break/fix monitoring, but they

Speaker:

didn't track usage and adoption.

Speaker:

How are you now tracking much

Speaker:

more larger amounts of data from

Speaker:

the installed base to understand

Speaker:

the usage and adoption around it?

Speaker:

It's a pretty massive change.

Speaker:

That's why we see a lot of

Speaker:

clients right now saying, "OK,

Speaker:

if this is going to be the

Speaker:

future of our company, we now

Speaker:

need to do an end-to-end

Speaker:

business process and technology

Speaker:

architecture review and yes,

Speaker:

basically come up with a

Speaker:

completely new technology stack,

Speaker:

ideally, that supports both the

Speaker:

old business and the new

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business." The old models

Speaker:

aren't going to go away, so you

Speaker:

can't easily afford two separate

Speaker:

sets of IT systems and

Speaker:

technology platforms. How do you

Speaker:

think through your core systems

Speaker:

to enable traditional product

Speaker:

sales, standalone services sales,

Speaker:

as-a-service sales, other types

Speaker:

of subscription business models?

Speaker:

It's possible, but it's a lot of

Speaker:

work. I'm spending a

Speaker:

lot of time with several clients

Speaker:

right now plotting out that

Speaker:

technology architecture of the

Speaker:

future.

Speaker:

The only thing I would add to

Speaker:

what Dave said is that if you

Speaker:

have a solution in the market

Speaker:

that is readily available, go

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with that, rather than try to

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create a solution on your own.

Speaker:

Or, when given a choice, go with

Speaker:

the out-of-the-box solution

Speaker:

versus trying to customize.

Speaker:

Right now, there are several

Speaker:

solutions available for the back

Speaker:

office as well as some of the

Speaker:

capabilities you need, leverage

Speaker:

them. That's the only advice I

Speaker:

give to the clients.

Speaker:

When you're thinking of a client

Speaker:

and how they picked, Vik, to

Speaker:

your point, an effective best of

Speaker:

breed out-of-the-box technology,

Speaker:

how do you help them assess if

Speaker:

their traditional IT stack can

Speaker:

map to that new stack and how

Speaker:

that works?

Speaker:

I'm doing this right now

Speaker:

with a client, and one

Speaker:

of the things we're doing is

Speaker:

forcing them to think through 15

Speaker:

or 20 different use cases or

Speaker:

user stories of the future.

Speaker:

Probably, 10 or 12 of them exist

Speaker:

today. They don't necessarily

Speaker:

exist in this client, but we're

Speaker:

saying, "OK, there's many

Speaker:

different flavors of as a

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service." Forcing them

Speaker:

to think through, what is the

Speaker:

evolution of all the different

Speaker:

business models and permutations

Speaker:

of business models that you

Speaker:

could imagine offering in the

Speaker:

future so that you could future-

Speaker:

proof? Often, these are pretty

Speaker:

big-ticket investments. You're

Speaker:

probably easily sometimes

Speaker:

talking $100 million or more for

Speaker:

a big Fortune 500 or Global 2000-

Speaker:

type company in order to enable

Speaker:

that tech stack in the future.

Speaker:

You want to future-proof the

Speaker:

investment. In my mind, I

Speaker:

always say let's start with,

Speaker:

what's the evolution of the

Speaker:

customer experience you want?

Speaker:

Number one. Two, what are the

Speaker:

different business models? As I

Speaker:

said, there could be 15 or 20

Speaker:

different flavors of those

Speaker:

business models. Then you can

Speaker:

pressure-test the architecture

Speaker:

against that. What architecture

Speaker:

choices I make give me the

Speaker:

flexibility to evolve my

Speaker:

offerings and my business models

Speaker:

over time? Some stack choices

Speaker:

are great for a narrow, one

Speaker:

business model, and if you're

Speaker:

quite confident that your future

Speaker:

looks exactly like this, you

Speaker:

might make one set of choices,

Speaker:

but if you're uncertain about

Speaker:

how this market is going to

Speaker:

evolve, then you want a more

Speaker:

flexible architecture that's

Speaker:

allowing you that flexibility

Speaker:

for the future.

Speaker:

The only thing I would add is

Speaker:

that when we are going through

Speaker:

the options, it's always good to

Speaker:

start with those use cases and

Speaker:

do end-to-end process so you can

Speaker:

see how the process actually

Speaker:

works and where the gaps are,

Speaker:

and then you scale, versus

Speaker:

trying to do everything together.

Speaker:

Pick a use case, follow the end-

Speaker:

to-end process, and that will

Speaker:

actually help you work out the

Speaker:

kinks in the process, and then

Speaker:

go to the next one, and the next

Speaker:

one.

Speaker:

Just to bring the conversation

Speaker:

back full circle, Vik, one of

Speaker:

the things you highlighted early

Speaker:

in the conversation was around

Speaker:

the importance of product

Speaker:

companies becoming digitized and

Speaker:

connected, and then ecosystems

Speaker:

being built on top of them. I

Speaker:

recognize that in the

Speaker:

traditional economy, product

Speaker:

companies furiously competed

Speaker:

based on capability and feature

Speaker:

set, and it was very hard to

Speaker:

differentiate. Whereas today, it

Speaker:

seems like companies big and

Speaker:

small can collaborate, and

Speaker:

partner, and enable different

Speaker:

components of the ecosystem.

Speaker:

Would love to get your thoughts

Speaker:

on coopetition as a future of

Speaker:

business and how that impacts

Speaker:

the way businesses seek to

Speaker:

compete.

Speaker:

When I started my career 20-plus

Speaker:

years ago, the thing used to be

Speaker:

that in the next few years, it's

Speaker:

not going to be companies

Speaker:

competing with each other,

Speaker:

rather, supply chains of

Speaker:

companies competing with each

Speaker:

other. The last four or five

Speaker:

years, I've started to say that

Speaker:

it's not the supply chains

Speaker:

anymore. It's the ecosystem of

Speaker:

the...how do you build the

Speaker:

ecosystem around you and how do

Speaker:

you leverage that to drive your

Speaker:

growth and transform, is going

Speaker:

to define who is going to win.

Speaker:

I'm a firm believer that you got

Speaker:

to build your ecosystem. You got

Speaker:

to pick the right partners, and

Speaker:

then you got to go all in,

Speaker:

whether it's to build the

Speaker:

product, whether it's to scale,

Speaker:

or whether it's to drive growth

Speaker:

in the market. I think that is

Speaker:

here to stay, and we see the

Speaker:

various elements of that. If

Speaker:

you look at Microsoft, Microsoft

Speaker:

is actually providing software

Speaker:

to Dell and HP. On the same

Speaker:

token, Microsoft also has the

Speaker:

product that competes with what

Speaker:

Dell and HP have to offer. I

Speaker:

feel that, like you said, the

Speaker:

coopetition is here to stay.

Speaker:

You just need to continue to

Speaker:

invest in pockets which can

Speaker:

drive benefit for you and know

Speaker:

that someone is going to come up

Speaker:

with competition, whether it's

Speaker:

your ecosystem partner or

Speaker:

competition. How you continue to

Speaker:

gain and join that? That's real

Speaker:

innovation.

Speaker:

Thanks, Vik, David. This was

Speaker:

phenomenal, really great

Speaker:

insights into as-a-service

Speaker:

business models and how product

Speaker:

companies can transform. I

Speaker:

really enjoyed the conversation

Speaker:

and look forward to connecting

Speaker:

again soon. Thank you.

Speaker:

Same here. Thank you.

Speaker:

Thanks, Dan.

Speaker:

On the next episode of Decoding

Speaker:

Digital...

Speaker:

In a digital world, things are

Speaker:

infinite. The possibilities are

Speaker:

infinite. The opportunity is

Speaker:

infinite. The ability for

Speaker:

inclusion is infinite. The

Speaker:

ability to actually make money

Speaker:

is infinite.

Speaker:

Founder, chairman, and principal

Speaker:

analyst at Constellation

Speaker:

Research, Ray Wang. Thanks for

Speaker:

listening to Decoding Digital.

Speaker:

Make sure you never miss an

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episode by subscribing to the

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show in your favorite podcast

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player. To learn more, visit

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decodingdigital.com. Until next